September’s retail inflation was the lowest in eight years, dragged down by falling vegetable prices. Meanwhile school fees, rent and doctor’s bills kept climbing. The headline number and the household bill measure different things.
India’s retail inflation fell to 1.54% in September, its lowest since June 2017. If your household budget did not feel eight-year-low comfortable, you are not imagining it. The headline number is a weighted average of hundreds of prices, and this month one heavy item, food, pulled the whole average down while many others kept rising.
What dragged it down
Food prices were about 2.3% lower than a year earlier, which economists call negative food inflation. A good monsoon brought big harvests of vegetables and pulses, and last September’s vegetable prices had been unusually high, so the comparison flattered this year, a base effect. Because food makes up close to half of the index, a fall in food prices can drag the whole number toward zero even when everything else is rising.
What kept rising
Strip out food and fuel and you get core inflation, which stayed above 4%. That is the part made of services and manufactured goods: tuition, rent, healthcare, haircuts, clothing, and this year gold jewellery, whose price surge pushed core inflation up on its own. These are the costs a city household with school-age children feels most. A family that spends heavily on rent and school fees is living with an inflation rate far closer to 6% than to 1.5%.
Everyone has a personal inflation rate. The national number is just the average of all of them.
Why it still matters
Low headline inflation is not a statistical trick. For farmers, it was a painful year, since lower prices for their crops meant lower incomes. For the RBI, it creates room to cut interest rates, which helps borrowers. For savers, it is good news, since a fixed deposit paying 6.5% beats 1.5% inflation by a wide margin and protects purchasing power. The lesson is to read the number for what it measures: the average change across the whole country’s basket, not the change in yours.
Sources: MoSPI CPI release for September 2025.
- CPI inflation was 1.54% in September 2025, the lowest since June 2017.
- Food prices fell about 2.3% on a year earlier, which dragged the average down.
- Core inflation, which excludes food and fuel, stayed above 4%.
- Your personal inflation depends on what you buy. Rent and school fees rise faster than vegetables fall.
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